Baidu Agrees to Buy Majority Stake in Nuomi for $160 Million

Baidu Inc. (BIDU), owner of China’s largest search engine, agreed to buy a majority stake in the e-commerce website operator Nuomi Holdings Inc. for about $160 million.

Beijing-based Baidu will buy about 59 percent of the operator of Nuomi.com from Renren Inc. (RENN), according to a PR Newswire statement. Nuomi had general merchandise sales of about $120 million in the second quarter, the companies said.

Baidu, which agreed to buy third-party app store 91 Wireless last month, is seeking acquisitions to tap growth in China’s online market, Chief Financial Officer Jennifer Li said July 25. The $1.85 billion deal, Baidu’s biggest announced purchase, may help capture more of the nation’s 464 million users who access the Internet from mobile devices.

“Buying Nuomi can help diversify Baidu’s revenue model,” said Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong by phone. “Adding e-commerce can complement Baidu’s advertisement business.”

The acquisition is expected to close in the fourth quarter, according to the statement.

Nuomi had 3.8 million active paying users, the companies said. About 30 percent of its sales in the second quarter were derived from smartphones, it said.

Baidu is trying to navigate a shift from desktop computing, where it manages 82 percent of the nation’s searches, to mobile devices. Yesterday the company said it is expanding with mobile applications that don’t need to be downloaded as it competes with Tencent Holdings Ltd. (700) for users in the world’s biggest smartphone market.

‘Lite Apps’

Mobile users can access so called “lite apps” for transportation, travel and entertainment information through Baidu’s search program on smartphones, Li Mingyuan, a vice president, said in Beijing yesterday. Baidu is also offering mobile payment services for developers to commercialize their applications, he said.

Mobile users can shop on Nuomi’s e-commerce platform, said Billy Leung, an analyst at RHB Research Institute Sdn. in Hong Kong by phone. The website, which offers daily-deals based on geography, also allows Baidu to leverage its location-based service, he said.

Baidu reported net income of 2.64 billion yuan ($431 million) in the second quarter, beating analyst estimates. Revenue rose 39 percent to 7.56 billion yuan.

The company boosted its workforce by 2,100 people to 24,000 by the end of June through new hires and the purchase of PPStream Inc. for $370 million in the June quarter.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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